April 8 (Bloomberg) -- HTC Corp. posted its second loss in
three quarters after sales at the Taiwanese maker of smartphones
slowed ahead of the release of a new version of its mainstay One
device.

The first-quarter loss was NT$1.88 billion ($62 million),
the Taoyuan, Taiwan-based company said in a statement yesterday.
That compares with the NT$1.71 billion average loss of 13
analyst estimates compiled by Bloomberg. HTC on Feb. 10 forecast
a loss of NT$860 million to NT$3.11 billion.

HTC released its One M8 phone on March 25 as part of the
company’s efforts to turn around more than two years of
declining sales amid a shrinking marketing budget and stiffer
competition from Lenovo Group Ltd. and ZTE Corp. Revenue and
profitability will improve this year as it offers a larger array
of mid-priced phones to appeal to more customers, Chief
Financial Officer Chang Chialin told investors in February.

“New products only came out in March and sales appear to
be weaker than even HTC expected,” said Calvin Huang, an
analyst at SinoPac Financial Holdings Co. in Taipei, who
recommends selling the stock. “We need to wait until May to see
whether sales throughput for M8 is as strong as they hope.”

Revenue for the quarter fell to NT$33.1 billion from
NT$42.8 billion a year earlier. The average of 19 analyst
estimates compiled by Bloomberg was for sales of NT$35.4
billion, while HTC had forecast a figure of NT$34 billion to
NT$36 billion.

‘Positive Trajectory’

HTC fell 2.5 percent to NT$155.50 at the close of trading
in Taipei. The stock has gained 10 percent this year, outpacing
a 3.2 percent advance in Taiwan’s benchmark Taiex index.

An operating loss of NT$2.05 billion was its third in a row
and was wider than the NT$1.94 billion average estimate. HTC had
forecast an operating loss of NT$1.78 billion to NT$2.19
billion.

“The company expects to see positive trajectory of its
revenue in April from March and forecasts quarter-on-quarter
revenue growth in the second quarter,” HTC said in the
statement yesterday. Sales will be driven by demand for its new
products, including the M8 and mid-tier Desire 816, the company
said.

The HTC One M8 features a 5-inch (13-centimeter) high-definition screen, Qualcomm Inc.’s Snapdragon 801 processor and
a micro SD slot, it said at release events in New York and
London. The phone’s physical design mirrors that of last year’s
HTC One model, which suffered production delays and a shortage
of components.

Revenue Estimates

While net and operating income are both expected to return
to profit in the second quarter, revenue will still be 20
percent lower than a year earlier at NT$56.5 billion, according
to analyst estimates compiled by Bloomberg.

March sales climbed 2.2 percent to NT$16.2 billion, the
first increase in monthly revenue since October 2011.

“The important thing to watch will be whether they can
sustain sales into the third month after M8’s product release,”
Birdy Lu, who rates the stock hold at Deutsche Bank AG in
Taipei, said before the announcement.